Want to get a handle on our household money? Use what psychologists call 'creative visualization.' Imagine yourself as the Chief Financial Officer (CFO) of My Family, Incorporated.

A major part of the effective management of a household budget is discovering where money is wasted. It is crucial to determine the most common areas where family money goes down the drain. Sit down with your family at the kitchen table, as if it were a board meeting, and discuss the following:

  • Who is responsible for paying the bills?

  • How many credit cards should your household use and who will have possession of them?

  • What's the family's cash flow -- i.e., how much money is coming in and how much is going out?

  • What's the overall family budget?

  • What's the budget for each individual member?

Above all, look at places in your family's budget where your money is poorly or inefficiently spent. One of the best ways to do this is to have every family member keep a record of their spending for a month and then discuss which purchases were necessary, and which were frivolous.

Give everyone a chance to talk, and be sure to set a good example. If your kids promise to cut back on their purchases at the soda machine, you should probably reconsider whether you really need to buy that extra flat screen TV.

Here are the six most common budgetary 'black holes' to look out for:

1. Over-Withholding of Federal Income Taxes on Your Paycheck

Choosing to take very few allowances on your paycheck (i.e., over-withholding) results in big tax refunds at tax season, which many consider to be a blessing. But all you're really doing is giving Uncle Sam an interest-free loan by paying more in taxes than you must all throughout the year.

You should pay your fair share in taxes -- nothing more, nothing less. Work with your HR department to ensure only the appropriate amount is withheld from your paycheck and make the adjustments on your W-4 tax form. If you find that you've been over-withholding, you could start getting a well-deserved bump in pay each month to help you pay down debt or build your retirement fund.

2. Keeping Very Low Deductibles on Your Car and Homeowner's Insurance

This results in monthly insurance premiums that are much higher than necessary, because statistical odds favor you not needing the extra insurance. Opt for higher deductibles on your insurance plans to shrink your premium payments and potentially save hundreds of dollars every year.

3. Carrying Credit Card Debt

A credit card balance with a high interest rate is essentially a negative double-digit investment that compounds in interest and makes it harder to build wealth as time goes on. So pay off your credit cards as soon as possible, if you have any. If you don't have any debt, your top priority should be to pay your credit card bill in full every month before the grace period ends, so you stay debt free.

[Free yourself from credit card debt -- Learn how to pay 0% APR for up to 21 months in The 4 Best Credit Cards for Balance Transfers.]

4. Bending to Pressure to Needlessly Upgrade

Whether it is a hotel, gym membership, car rental or airline ticket, resist marketing pressure to 'upgrade' when that wasn't your original intention. Do you really want to spend $30 for more legroom or $20 more a day for a rental car that's bigger than what you really need? If you don't need it, stick to your guns and firmly say 'No.'

5. Not Knowing the Difference Between 'Must Haves' and 'Desires'

Our consumer society barrages people around the clock with advertising messages exhorting them to constantly buy, buy, buy. However, don't confuse necessities with luxuries. You don't necessarily need brand-name electronics and clothing. Lots of material possessions may make you appear rich, but being overburdened with debt is no sign of affluence. True wealth is defined not by what you buy; it's what you can keep.

6. Racking Up ATM Charges

Every time you use a cash machine other than those within your bank's network, you are charged anywhere from $3 to $5 a pop, just to access your own money! Do the math: frequent ATM use accumulates over time. If you need cash, try various alternatives, such as getting cash back for free from the grocery store register or ATM withdrawing one large amount of cash sufficient to carry you through a few weeks or the entire month.

Now that you've plugged the holes in your budget, you may want to look for some effective ways to shrink your monthly payments, get out of debt and start building wealth.

Here are Three More Ideas to Help Reach Your Financial Independence:

  1. Free yourself from credit card debt this year. Learn how to pay 0% on your balances for up to 21 months in The 4 Best Credit Cards for Balance Transfers.
  2. Pay off your mortgage to free up an extra $1,000 to $2,000 every month. Check out 3 Ways to Pay Off Your Mortgage 15 Years Early.
  3. Shrink and eliminate your car payments. If you're paying 6% APR or more, it's time to know The Top 3 Reasons to Refinance Your Auto Loan.